The present invention relates to a method and apparatus for approving financial transactions, particularly self service fuel purchases, by identifying valid or invalid transaction cards.
Transaction cards, such as credit cards or debit cards, have enjoyed increasing use in recent history. This increased use has resulted in increased financial losses due to transaction card fraud. A primary source of such losses is the use of invalid transaction cards, which are defined herein as transaction cards that have been reported lost or stolen, cards that have been used in excess of a predetermined credit or debit limit, and cards that have been otherwise deactivated.
One known method of minimizing the losses resulting from the uses of invalid transaction cards is the distribution of a printed list of invalid cards, such as the so-called Card Recovery Bulletin, which is then used by vendors to check the account number of a card presented for a transaction against the invalid card list. A primary drawback of using such a printed list is the time lag between the determination that a transaction card is invalid, and the distribution of that invalid card information to vendors.
This time lag has been addressed by use of real-time on-line communications networks which allow vendors to report the account number of a card presented for a transaction to a central location by telephone or similar communications network. The account number under investigation is then compared to a centralized list of invalid card numbers, which is updated much more rapidly than the prior printed lists. However, such real-time on-line comparisons are at the mercy of the particular communications network being used, and such comparisons become impossible when the communications link is inoperative. In addition, even when operative, such a centralized master list of invalid cards must be accessed by hundreds or even thousands of vendors, which can result in unacceptable access delays. Minimizing such delays is particularly important in self service transactions, such as self service gasoline purchases.
This has given rise to the decentralization of the master lists for invalid transaction cards, with the transaction card validity assessment being performed at the vendor site with the invalid card information being periodically updated from a central location.
One such system is disclosed in U.S. Pat. No. 3,696,335, issued Oct. 3, 1972, which contemplates the storage of the entire invalid card list in each transaction terminal at a vendor site. However, this system has proven impractical because the lists of invalid transaction cards have become so large that distribution of the entirety of such lists to each transaction terminal is virtually impossible.
One approach to this problem is presented in U.S. Pat. No. 4,558,211, issued Dec. 10, 1985, which proposes the addition of an identifier to each listed invalid card which indicates the geographical location in which the invalid card is most likely to be used. Then, subsets of the invalid card list are transmitted in their entirety to vendors in a particular geographical location.
While this system greatly reduces the amount of invalid transaction card information that is transmitted from the central location to the individual vendors, such a system is ineffective to detect use of invalid cards in geographical locations other than those indicated by the selected identifier.
Yet another system for reducing the amount of invalid card data to be transmitted to individual vendors is disclosed in U.S. Pat. No. 4,943,707, issued Jul. 24, 1990. In this system, the entire invalid card list is compressed before transmitting to the individual vendors. The compression is accomplished by application of so-called "hashing" procedures to create bit maps which approximate the invalid card data, which are then distributed to transaction terminals.
However, this system contemplates a reduction of the amount of invalid card data that is downloaded by a factor of only about five, and also contemplates the erroneous identification of a valid transaction card as invalid in as much as ten percent of all transactions.
It would therefore be desirable to provide a transaction card validation system and method which would permit accurate determination of transaction card validity, while at the same time reducing the amount of invalid transaction card data that must be downloaded from a central location and stored at vendor sites in transaction terminals.